Morpheus launches sans new gaming tables

Mr. Lawrence Ho, Chairman and CEO of Melco Resorts & Entertainment making the welcome speech in press conference during Melco Morpheus building Opening in Macau, China, on 15 June 2018. Photo by Graham Uden

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While the DICJ did not authorise any new gaming tables for Melco Resorts and Entertainment’s Morpheus hotel tower, analysts are confident that the additional hotel rooms the property brings to the table will help grow the company’s top line.

Melco Resorts and Entertainment’s newest hotel tower at City of Dreams, Morpheus, officially opened its doors on 15 June, however Macau’s regulator did not authorise any new gaming tables for the property.

Speaking at the opening press conference for Morpheus, Lawrence Ho Yau Lung, chairman and CEO of Melco Resorts and Entertainment explained that Macau’s Gaming Inspection and Coordination Bureau (DICJ) had “maxed out” its table quota for this year.

This was due to the opening of the $3.4bn MGM Cotai resort in February, which received 100 new-to-market live dealer tables, while Sands China’s Parisian Macao and Wynn Macau’s Wynn Palace were allocated an additional 25 tables each in January 2018.

The 770-room hotel opened with 40 gaming tables transferred from other Melco properties, but Ho stated that he remained confident the government would grant the company additional gaming tables in 2019.

“I think the government is looking at next year’s quota for us,” he explained. “I think in the meantime, we are ok with moving tables and re-allocating them.

“But again, I am super confident that the Macau government has never failed us before and has rewarded us appropriately for our contribution and I think it’s not just contribution in the last couple of years.”

Morpheus will launch its hotel rooms in phases, with the first phase to introduce 200 to 300 rooms.

“After [we] complete all [the] troubleshooting, we will gradually introduce 100 rooms per two weeks,” said Ho. “By the time in July, we will have all rooms put into operation.”

Analysts highlighted that regardless of the final table allocation, the addition of the new rooms alone will increase Melco’s total room inventory by 25 percent.

“When we look at our numbers and our forecast for City of Dreams in specific, I think the top line can grow 30 to 40 percent after the addition of these new rooms alone, regardless of whether or not they get any new tables,” said Union Gaming MD, Grant Govertsen, speaking to CNBC.

“The reality there’s not enough rooms in the market today to satisfy the pent-up demand on the other side of the border.

“That $1.1bn being invested in Morpheus, I think the return profile is going to be very strong, regardless of how many tables they get,” he added.

This view was shared by Japanese brokerage Nomura, which contended that “the most important driver for Melco isn’t its table count”.

“Macau is capacity constrained, not in its number of gaming tables but in its number of hotel rooms (or lack thereof) which is Morpheus’ main appeal,” the brokerage wrote in a note on 15 June. Morpheus launches sans new gaming tables
While the DICJ did not authorise any new gaming tables for Melco Resorts and Entertainment’s Morpheus hotel tower, analysts are confident that the additional hotel rooms the property brings to the table will help grow the company’s top line.

Melco Resorts and Entertainment’s newest hotel tower at City of Dreams, Morpheus, officially opened its doors on 15 June, however Macau’s regulator did not authorise any new gaming tables for the property.

Speaking at the opening press conference for Morpheus, Lawrence Ho Yau Lung, chairman and CEO of Melco Resorts and Entertainment explained that Macau’s Gaming Inspection and Coordination Bureau (DICJ) had “maxed out” its table quota for this year.

This was due to the opening of the $3.4bn MGM Cotai resort in February, which received 100 new-to-market live dealer tables, while Sands China’s Parisian Macao and Wynn Macau’s Wynn Palace were allocated an additional 25 tables each in January 2018.

The 770-room hotel opened with 40 gaming tables transferred from other Melco properties, but Ho stated that he remained confident the government would grant the company additional gaming tables in 2019.

“I think the government is looking at next year’s quota for us,” he explained. “I think in the meantime, we are ok with moving tables and re-allocating them.

“But again, I am super confident that the Macau government has never failed us before and has rewarded us appropriately for our contribution and I think it’s not just contribution in the last couple of years.”

Morpheus will launch its hotel rooms in phases, with the first phase to introduce 200 to 300 rooms.

“After [we] complete all [the] troubleshooting, we will gradually introduce 100 rooms per two weeks,” said Ho. “By the time in July, we will have all rooms put into operation.”

Analysts highlighted that regardless of the final table allocation, the addition of the new rooms alone will increase Melco’s total room inventory by 25 percent.

“When we look at our numbers and our forecast for City of Dreams in specific, I think the top line can grow 30 to 40 percent after the addition of these new rooms alone, regardless of whether or not they get any new tables,” said Union Gaming MD, Grant Govertsen, speaking to CNBC.

“The reality there’s not enough rooms in the market today to satisfy the pent-up demand on the other side of the border.

“That $1.1bn being invested in Morpheus, I think the return profile is going to be very strong, regardless of how many tables they get,” he added.

This view was shared by Japanese brokerage Nomura, which contended that “the most important driver for Melco isn’t its table count”.

“Macau is capacity constrained, not in its number of gaming tables but in its number of hotel rooms (or lack thereof) which is Morpheus’ main appeal,” the brokerage wrote in a note on 15 June.

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